Expect No Real (Forward) Guidance From Your Leaders

“Guidance” is the new organizing credo of US financial life with Janet Yellen officially installed as the new Wizard of Oz at the Federal Reserve. Guidance refers to periodic cryptic utterances made by the Wizard in staged appearances before congress or in the “minutes” (i.e. transcribed notes) from meetings of the Fed’s Open Market Committee. The cryptic utterances don’t necessarily have any bearing on reality, but are issued with the hope that they will be mistaken for it, especially by managers in the financial markets where assets are priced and traded.

One such infamous moment of guidance was Ben Bernanke’s May 2007 statement saying that percolating sub-prime mortgage problems were “contained.” If that was a signal for anything it was a green light for banks not yet deemed too big to fail to continue constructing swindles called collateralized debt obligations (CDOs), which were bundles of already bundled mortgage backed securities based on janky mortgages for million-dollar houses owned by Las Vegas busboys, and the like, that had no prospect of ever being paid. The banks kept at it sedulously for another year, and then in September of 2008 this stream of combustible financial garbage blew up the banking system. Nobody at the Fed saw it coming, least of all Janet Yellen.

And then the banking system was “rescued” by the “program” (free money bailouts) enacted by congress called TARP, while the Fed set up a carry trade system that would enable the floundering (now) too big to fail banks to convert massive volumes of zero-interest no-risk loans into a dependable revenue flow to “build reserves,” that is, allow them to appear solvent while engaging in new dodges, swindles, and manipulations of markets, currencies and interest rates.

Which brings us very near the present. Fed chairperson Yellen gave a marathon six-hour audience to the House Committee on Financial Services last week. It was so devoid of substance and meaning that the TV network covering it switched the feed a few times to the exciting Olympic event of curling, in which “athletes” wield brooms to induce giant polished stones to glide across a length of ice at a scoring target — that is, an entirely artificial and purposeless activity aimed at producing a trance of contentment among viewers who have nothing better to do in the middle of the day.

Last May’s remarks by then Fed Chairperson Ben Bernanke that the Fed might consider “tapering” its gigantic monthly purchases of US Treasury bonds plus an equal amount of stranded mortgage paper made the markets so nervous that stock indexes had a seizure and the interest rate on the lodestar ten-year treasury bill shot up 150 basis points — into a zone that would cripple the government’s ability to keep its credit revolving. These dire portents prompted Bernanke to take back what he’d said, but then three months later, in the fall, he restated the taper guidance. By then, market watchers and playas were sure that he was just juking them, and anyway they were too busy stuffing their Christmas bonus stockings to take him seriously.

Lo, the taper is still on under Wizard Yellen, for the simple reason that if she backed out of it now, before she officially chaired her first meeting of the Fed governors, her outfit would lose whatever shreds of credibility it still hangs onto. Even with the taper on, it is for now still pumping over half a trillion dollars a year into the banking system. There is some reason to think that it made the markets puke two weeks ago. But then a really bad employment number came out, and in the inverse climate of bad-news-being-good-news for bubble markets, that was construed as a sure sign that the Fed might have to un-taper sometime around late spring with Yellen’s chairpersonship fully established. I suspect they’ll do something else: they’ll continue to taper down purchases of treasuries and mortgage detritus via the direct TBTF bank channel and they’ll establish a new “back door” for shoveling money into the system. Nobody knows what this is yet, and it may be some time even after it starts that the mechanism is discovered. In the meantime, the seeming placidity of the renewed “risk on” mood should be a warning to market cheerleaders. Something’s got to give and I think it will be the US dollar index, which has been in Zombieland since November. The world has never been so ready for a change in direction. Expect no real guidance from your leaders.

Since it's illegal for the FED to hand out money to the TBTF banks directly, I wonder if a citizen's group can sue the FED for gaming the system by handing them loans for very little interest and redeposit them for higher interest effectively handing them money.

Someone who has no idea what is going on, has no technical expertise in any topics they discuss, and who's only skill is detecting where the hive mind is going already and jumps in front saying "Follow Me!"

Cuz most religions speak in this code full of vague BULLSHIT. Otherwise it'd be something else other than religion. We INSIST on this type of talk from our Messengers of the Gods.

PONZI sits atop his mayan temple proclaiming MORE monuments are the answer, at ANY cost. Do it faster to please the gods. Do it or the RAINS WONT COME! He has become the MOST POWERFUL GOD OF ALL TIME. He givith SUNDAY for any midget God we worship, but MONDAY thru FRIDAY are to be DEDICATED TO HIM.

Then all the PONZI Priests spread like plague to regurgitate the message, and we worship them... We give them immunity from all worries. We excuse them from guilt. We shower them with gifts. Guilt is the burden left for us... So we blame ourselves for the table scraps.

Failures of PONZI are ALWAYS our own. Our moments of weakness and lack of faith in the PONZI ORDER become rational excuses for periods of drought.

PONZI provides guidance to all Humanity through the good word.... So we shower him with rose petals and await his next public appearance.

We politicians and bankers have fucked you brave stupid poor little people in the ass with TARP put on the Ben's cock and will fuck you again even thoug the Ben is gone. We have for you a little stupid fucking lady Yellen who will soften the image of us being the masters of assfuckers and keep you calm. And BTFD

It's been headed upward with minor variation for a few days.... no major downward move at the time of your post - or are you one of the 'perception police' employed to shape opinion following a script (for a few cesnts a posting - better than work at McD's I suppose) who misread the schedule and posted early?

devo - well the gold price is heading down as I type this. I'll have to check the time put up after I post this. After recent price movement a lot of us expected an attack and it'll be interesting to see how it goes next week.

Just a little bit of friendly advice though . . . . people have to grow a rhino tough skin on ZH.

Everyone will have a statement that's down arrowed or jumped on if theyre here long enough. IMO that's actually a postive aspect of the site. You might down arrow a statement from someone, and in the very next article up arrow another statement of their''s on a different topic. Instant feedback.

In the 1932 movie, "If I Had A Million," John Glidden talks about who would take over his businesses if Glidden were no longer around. The following excerpt is from the movie's script. Glidden's doctors have told him he does not have long to live. I especially like Glidden's comment that "they'll make a meal for the first wolf that finds them." Glidden could be describing the incompetents running the USA into the ground now.

2200:03:17,040 --> 00:03:21,409Don't talk to meabout my employees.

2300:03:21,480 --> 00:03:23,767Dummies.

2400:03:23,840 --> 00:03:26,446Idiots. Fools.

2500:03:26,520 --> 00:03:30,047Not a business headin the lot of them.

2600:03:30,120 --> 00:03:33,283Bankrupt the whole business in a year.

2700:03:33,360 --> 00:03:38,571Stupid cowards. No brains, no nerves.Just a lot of sheep who do what I tell 'em.

2800:03:38,640 --> 00:03:40,642When I'm not here to tell them,

2900:03:40,720 --> 00:03:44,441they'll make a mealfor the first wolf that finds them.

"Fed chairperson Yellen gave a marathon six-hour audience to the House Committee on Financial Services last week. It was so devoid of substance and meaning that the TV network covering it switched the feed a few times to the exciting Olympic event of curling,..."

At least with curling we see an honest effort with measurable results...Yellen's delivery was more like hurling, and I do not mean the Irish sport.

The reality is that public "leaders" are the best available professional liars and immaculate hypocrites, which work as puppets for the actual "leaders" who were the people that were the best at being dishonest and backing that up with violence. The public "leaders" have the job of being the puppets mediating between the oligarchical ruling classes, and the masses of muppets. The REAL source of "leadership" was the history of warfare, where success was based upon backing up deceits with destruction, upon which was built the financial system of backing up frauds with force.

"... they’ll establish a new “back door” for shoveling money into the system. Nobody knows what this is yet, and it may be some time even after it starts that the mechanism is discovered."

What most articles discuss as "moral hazard" is like discussing the impropriety of picking ones nose in public, after the person doing that has jumped off the top floor of a skyscraper. All of the relative "moral hazards" regarding keeping the current systems going by "shoveling money into the system" are trivial compared to the fundamental structure of the system itself.

But nevertheless, I agree most with the point that the surprising creativity in the repackaged frauds that our "leaders" develop tends to astonish me. After all the ONLY thing that they are good at is fraudulence (due to long history of backing that up with so much force that that has given their financial frauds awesome momentum.) Therefore, I confess that usually I am still quite flabbergasted, after I discover the latest kind of astounding new frauds that our "leaders" have concocted. History selected for our "leaders" to be good at nothing but being dishonest, and backing that up with violence. They were necessarily the best at doing that! Therefore, they do "lead" the way by inventing new ways to repackage their fraudulence (although, usually, one can find that even there, they have merely copied from the pattern of plays to be found in the old books about the principles and methods of organized crime, and then slightly modified some aspect of those.)

The world as a whole is "led" by runaway systems which were selected by each short-term increment of claims backed by coercions, whose longer term consequences never mattered, because those had no real effect upon the immediate expediences of backing up lies with violence. Primarily, the laws are legalized lies, backed up by legalized violence, whereby the persistent application of that violence eventually results in the majority of people accepting those lies as somehow being the truth, because they must adapt to that de facto situation.

The "guidance" that the public gets from their "leaders" operates inside that historical context, where the money system is the state religion, backed by the power of the state, through which means the high priests (and now high priestess) of that state sanctified religion are able to promote the absurdities of frauds, as if they make sense, because they are backed by force, which never truly makes those frauds make sense, but nevertheless continues to enable those frauds to dominate the civilization, and drive more development of repackaged frauds to continue to emerge from out of those secret systems of organized crime, into public presentations, pretending to be something utterly different than what they actually are.

Yellen currently symbolizes the pinnacle of that system, wherein the government is the biggest form of organized crime, controlled by the best organized gang of criminals, so that they CAN establish a new “back door” for shoveling money into the system, DESPITE THAT nobody knows what this is yet, and it may be some time even after it starts that the mechanism is discovered.